23/01/2015 Global weekly: Massive and open-ended
Equities rose and bond yields fell this week when the European Central Bank exceeded market expectations with a more than EUR 1 trillion programme to spur inflation and growth.
Yesterday’s announcement by the Swiss National Bank (SNB) to abandon its minimum exchange rate clearly took markets by surprise. The Swiss franc soared, while Swiss stocks tumbled. European equity markets, however, responded modestly positive to the news. At this point in time, we do not see any reason to adjust our overall investment strategy or individual company recommendations.
Unexpectedly today, the Swiss National Bank (SNB) gave up its battle to avoid further appreciation of the Swiss franc. Recently, strong currency inflows had been recorded, due to the renewed worries about the sustainability of the euro and the possibility of a large quantitative easing programme by the European Central Bank.
Energy and food prices fell sharply, but core inflation rose in the eurozone. Also the euro has weakened further. Together with low eurozone growth, these circumstances will drive the ECB to finally announce large-scale asset purchases.